Will you have enough money for retirement? How will you get it, by savings? Or do you expect to inherit your retirement? Should this even be a concern? Is retirement worth worrying about?
In Matthew 6: 25-34 Jesus tells us 4 times not to worry. Our heavenly Father knows we have needs. We know that God does and will provide. But, wouldn’t we be presumptuous if we just sit back and do nothing? So, what are you doing; on what are you counting to provide for your needs in retirement?
Many of us incredulously count heavily on precarious sources to provide for our old age. Many expect to inherit large sums that, combined with social security, will generate the income desired to support our current lifestyles. Let’s see about that.
Social Security? Really?
Baby Boomers used to enjoy joking about the unlikelihood of social security being there when needed in retirement. This was a benefit available to past generations, but not for us. Lengthening the time line of when full benefits are payable is just one imposition that helps confirm that notion. But, as we Baby Boomers near retirement age, we hope to leave these fears for Generation X, Y and Millennium and claim our due.
It is reasonable to believe that social security benefits will be paid to retirees for years to come. In 1980, the Federal Old-Age Trust Fund from which social security benefits are paid had a balance of $26 billion. Today, the balance is over $1 trillion. So, what’s the worry? Only two things.
When social security began building its trust fund in the late 1930’s, there were 159 workers contributing for every beneficiary of the system. There are only 3.4 workers for every beneficiary today. There have been only 3.4 or so workers per beneficiary since 1970.
Yet, the trust fund balance has grown dramatically. However, the trust fund can invest only in Treasury securities. Treasuries are obligations of the federal government. So what we have is a government program obligated to make payments to covered individuals that gets its money from obligations of the government. Huh? Can you say deficit?
Now for the bad news: Will you inherit your retirement? A Federal Reserve study done in 2000 estimated that only eight percent of Baby Boomers would inherit any money. A recent AARP study was more optimistic. It showed that 17% of Boomers had already received an inheritance, and that another 15% expected to. Even so, the median value of inheritance was $47,900. Less than two percent received over $100,000. Who can afford to retire on a social security check and $47,900 in the bank?
The reasons for this paltry pittance are obvious. Health care costs are rising at ever increasing rates. Even if the government comes up with a national plan, what government agency can we hold up as an example of prudent and efficient fiscal operations? Plus, with all of the necessary spending in an effort to revitalize our economy, our national debt must put added demands on future cash flow. And parents are living longer and necessarily spending down accumulated assets. With all the trouble we Boomers caused our parents during the wild and free days of our youth, they are justifiably less concerned about leaving any inheritance. (Teenagers take note)
So I ask again, Will you inherit your retirement? Will that be enough money? Are you maximizing your 401k contributions? Are you contributing to a Roth IRA? Talk to us, or your trusted financial advisor today about your retirement needs. We can help you determine what you need to do today, how to align your budget in a way pleasing to God, so that you’ll have financial peace of mind tomorrow.